[umanwizard]

> $1 of stock isn't worth $1 of liquid assets

Er, why not? Only difference is I have to pay a $5 trading fee on Schwab to turn stock into cash. So I guess $10,000 in stock is worth $9,995 in liquid assets.

> even then, you're putting a lot of eggs in one basket.

Only if you hold the stock. Which nothing forces you to do. I can (and do) sell all of my tech company stock on the day it vests and buy other assets instead.

I think you must have the wrong mental model of how RSUs work. Nothing forces you to hold the stock once it vests. It's yours, you can sell it and do whatever you want with the money.

Usually when people at a public company say "I make X", X is the sum of base salary, cash bonus, and the value of RSUs that vest in a year.

[sjg007]

You can hold it to reduce taxes right?

[umanwizard]

Not that I'm aware -- how would holding it reduce taxes? I'm not sure I understand.

[kspaans]

Long Term Capital Gains Tax treatment when you sell (20%) after at least one year vs regular Income Tax treatment if you sell right away.

[umanwizard]

If the stock is $100 when it vests, you pay income tax on $100 per share, whether you hold or sell. It's exactly the same as if you got paid that money in cash and then decided to buy shares (after paying tax).

If you then hold and it goes above $100 while you held, you pay capital gains tax (short or long-term, depending on how long you hold) when you sell.

Again, exactly the same as would happen if you bought those shares yourself with a cash bonus. Getting shares really is the same as cash, for tax purposes.

[traek]

Yes, but that's only on the capital gains. You still pay income tax on the value of the equity when it's granted.

[ohazi]

No. RSUs are not stock options. They're taxed at their current value when they're given to you.

[kspaans]

Right, I was assuming sjg007 was talking about tax treatment of the capital gains if you hold onto the stock after the RSUs vest.

[umanwizard]

I still don't get how there's any way holding it instead of selling it reduces taxes.

If you sell on vest, you pay income tax and 0 capital gains. If you sell after vest, you pay the same amount of income tax, and possibly nonzero capital gains.